Innovation isn’t easy.
It’s not just R&D, or the job of a director, manager or team who has “innovation” in their title. It’s not a top-down direction or a bottom up movement, but a combination of internal company factors, culture and external market forces. One of the best ways to understand this phenomenon and to transition away from using it just as a buzzword, is to look at a case study of what it’s not.
The Anonymous Infrastructure Company, Company X
In the year 2009 an infrastructure company, which we’ll call Company X, was on a spending spree. By spending spree I mean the company had money coming out of its ears – around $2b per year for the next 5 years. It was struggling to reach, yes reach, its expenditure target.
For any other well oiled and functioning company, this is a great place to be. However for Company X, their functional was not a word that could describe their business. To compensate, they served gourmet sandwiches at every single meeting held, organised “team building sessions” at luxury hotels and commenced a program of “overseas research trips”. They built training centres and purchased property for future use. They went so far as to convert the default printer settings to print in colour, and single sided. While I’m a huge fan of the principle of abundance, this situation was clearly the opposite: it was absurdity.
The reality was that their systems and processes were broken, projects well behind schedule and staff excessively overpaid: signs of a dysfunctional company and a recipe for disaster!
Making Matters Worse: Let’s Innovate!
Money is a funny thing, because those with too much always end up wanting more. At Company X, the plan was in motion to load up their kitty. The snap decision: there’s no better time to innovate.
Company X put in a proposal to lead an innovation and R&D consortium to be cofunded by the government, with $100m up for grabs. Now $100m isn’t a lot when compared to their $2b annual capital budget, but for over 95% of companies in the world, $100m to spend on innovation and R&D is unheard of. It’s a situation every CEO wants the credit for, every CTO wants to lead, and every engineer would die for.
As 2010 came around, Company X was awarded the funding all thanks to their positioning as a company of strength and growth, and they went on to bring together a consortium of industry and technology heavyweights. The plan: to start a new spending and hiring spree, but this time focused on new technology in their industry.
This is a good time to introduce the fact that this company was not an end-consumer facing company. They were part of a supply chain and at times even struggled to identify who their customers really were.
RULE #1: KNOW WHO YOU’RE INNOVATING FOR!
RULE #2: INNOVATION ISN’T A SNAP DECISION TO ACT OR INVEST
What goes up, must come down
Company X initiated no less than 20 parallel R&D projects, research tasks, pilots and trials. The team, which we’ll call Team X, grew massively overnight, to the point that all the newly recruited project managers, technology gurus and consultants were thrown into an adjacent office block across the road. Their leader: a young aspirational manager who had come through the ranks as a graduate and had made a name for himself off the back of technology pilot project. Let’s call him Mr X. It’s no surprise that this would trigger the beginning of the end for Mr X’s career at Company X. It was a lot to handle.
A few months in, the cracks started to open up. Experts within Team X were clashing and feet were getting stepped on. Team X was rocking the boat a bit too hard and were soon isolated from the rest of the company and looked down on. They were cast to the curb and labeled as not really part of the company – reckless cowboys (and cowgirls) for their lack of understanding of the real problems in the industry and how the business worked. Mind you, they were being critisized by the other half of the business that was dysfunctional.
Inevitably, the projects started to fall over. Many of the new technologies were failing and results collected were being shaped to sell the success story. The dysfunction had become a lot worse. After no more than 3 years Mr X moved on, consultants disappeared and experts had their hands in the air with not much to show for their efforts.
The program began ramping down and was left to Company X to clean up the mess.
i) Less than 3 project innovations continued beyond the life of Team X;
ii) The industry as a whole was deterred from innovating, and is now facing large-scale disruption;
iii) Taxpayers were fooled into believing their hard earned incomes had been well spent; and
iv) Innovation at Company X was killed indefinitely
For Company X, the biggest cracks of all started to open up and the widespread dysfunction was exposed. It went on to implode with thousands of staff laid off, a disappearing capital budget, a broken company culture and finally the sale of the company. Did I mention that this used to be the one of the best places to work in the country?
RULE #3: INNOVATING NEEDS A GREAT LEADER, AND AN EVEN GREATER TEAM.
RULE #4: INNOVATION TAKES A COMPANY WIDE EFFORT. IT CAN’T BE OUTSOURCED
RULE #5: YOU CAN’T INNOVATE ON SHAKY GROUND
RULE #6: INNOVATION CAN MAKE OR BREAK YOU. TREAD CAREFULLY!
So then, what is innovation, and how should we innovate?
Put simply, innovation is about one thing: continual improvement across the company to grow the value offered to end-consumers. It’s not just R&D, and it’s not acquirable. It needs to be ingrained in the company’s vision and values, and is measured by performance in the market and raising the bar in the industry.
Great innovating companies are usually born from great innovators, and companies that become great innovators only do so through a strong mix of leadership, consideration for the market and planting of the innovation seed throughout the company.
These seeds can come from:
- Reiterating on the company vision and the “why”, the plan to get there and the resources needed
- Engaging with customers and taking the time to study not just who they are, but how they are changing
- Leveraging the research community and staying in the loop with new solutions and technologies in the market
- Prioritizing value over profit
- Opening the doors: gaining fresh perspectives, insights and help. Open Innovation is a movement that has catapulted companies throughout Europe and the US.
Water these seeds every day, they don’t make snap decisions to invest or act.
RULE #7: PLANT THE SEED TODAY, AND WATER IT EVERY DAY